If I have $40,000 of pre-tax, what are the differences between $1,000 tax credit versus a $1,000 tax deduction for a single taxpayer in the 25% tax bracket? What is the difference between deductions for adjusted gross income (AGI) and deductions from AGI? ...
Not all employers who offer a 401(k) plan will offer the Roth version. When you contribute to a Roth 401(k), the funds are deducted from your after-tax income, so you do not have any tax deductions for the year you make the contributions to this account. However, this also means yo...
A Roth IRA offers opposite tax advantages from a traditional IRA: You pay tax on income before you make contributions to the Roth IRA, but you’ll pay no tax on withdrawals of either your earnings or contributions when you make withdrawals in retirement. However, not everyone qualifies for a...
Currently maxed Roth 401k, Roth IRA, HSA, and ESPP at 23 YO, should I consider an after-tax conversion? I’ve read about back-door Roths but I’m still far below the income limit as an analyst. Definitely looking into early-ish retirement, ...
and mutual funds,you have no way of knowing how much money you’ll have when you need it, because there is no way to know the value of your investments next year OR in 30 years. Furthermore, if you are investing inside your retirement plan, you are subject to strict401k withdrawal ...
In addition to the tips for people pursuing FIRE, those looking to Fat Fire have a new set of concerns as well. For one, taxes start to play a much more prominent role in your planning. I read tax books for fun, and a few of the same themes come up over and over: ...
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Both the Roth 401(k) plans and the Roth IRA plans use after-tax dollars, meaning that the owner does not have to pay income taxes when they receive distributions, making this advantageous to those who expect to earn more money later in life. However, there are several key distinctions betw...
In this case, the income tax is paid immediately but no taxes will be owed when it is eventually withdrawn properly. The Roth is a "post-tax" plan.4 The employer offering a 401(k) plan may make matching contributions on behalf of employees, up to a limit, and may also add a ...